Tesla Shares Are UP After Elon Musk Quits Twitter Deal

Joaquin Victor Tacla, Tech Times 09 July 2022, 05:07 am

Investors seem to have lauded Elon Musk's move to back out of his Twitter deal.

Friday's after-hours trading saw a spike in the price of Tesla shares as investors welcomed Elon Musk's decision to back out of his $44 billion acquisition of Twitter, according to a report by TechCrunch.

Musk Backs Out, Investors Roll In

Tesla stock increased 14.51% on Friday to settle at $752.29 per share. As of writing, the share price had increased by as much as 3.39% after regular trading hours until leveling off at a gain of approximately 2.68 percent.

In an official letter, Musk's legal team attempted to cancel the terms of the deal to buy Twitter. Bloomberg's Ed Ludlow confirmed the termination after Musk's team issued a new filing with the Securities and Exchange Commission (SEC)

Musk said in the letter that the social media company "appears to have made false and misleading representations" that he had relied on and that he was ending the deal because Twitter is in material violation of several terms of its merger agreement.

Twitter received official notice that the $44 billion agreement, which would have brought the social media platform private, was being terminated. This comes after months of rumors that Musk had changed his mind about the agreement due to his frequent complaints about Twitter, which he claimed was withholding its spam bot data.

Tesla's investors have recently voiced concerns about Musk's capacity to manage Tesla properly while also controlling Twitter and a small number of other businesses, including SpaceX, The Boring Company, and Neuralink.

As a result, Tesla's stock has suffered since the Twitter deal announcement.

According to TechCrunch, Tesla shares were trading at $1,145.45 in early April when Musk purchased a 9.2 percent interest in Twitter, making him the social media company's largest shareholder. Since then, the share value has decreased by more than 34%.

TechCrunch further noted that one of the more significant dips in recent months occurred on April 26, after Musk's announced purchasing of Twitter. Tesla's market value dropped to $906 billion as a result of the stock's more than 12% decline.

Following Musk's disclosure of his ownership stake back in April, Twitter shares initially increased but have since dropped. The market capitalization of Twitter tanked to $28.31 billion after a 26.34 percent decline in share price since April 4.

The current share price of $36.81 is significantly less than Musk's cash acquisition bid for Twitter, which valued the company at $54.20 per share.

It Has Only Just Begun

However, Tesla investors can't expect a piece of good news too soon since this Twitter-Musk issue has only just begun.

The board of Twitter has already vowed to reject Musk's decision. Its chairman, Bret Taylor, said in a statement that legal action would be taken if the agreement were to be scrapped in the future.

The legal team for Twitter expects to pursue the case and enforce its right to proceed with the merger as part of the initial transaction.

This article is owned by Tech Times

Written by Joaquin Victor Tacla